EU subsidy reform on hold -- again

As those who follow agricultural trade issues know, the European Union spends the equivalent of $53.5 billion a year – or half its budget – on the CAP. In contrast, the U.S. government limits such spending to $19.1 billion a year under World Trade Organization agreements.

The latest reform proposal would not have reduced those outlays as much as it would have “decoupled” them from farmers’ production. Reformers say the CAP promotes overproduction of grains, beet sugar and other products that are then dumped in Third World markets.

If that complaint sounds familiar, it’s one that is being increasingly taken up by national news media outlets such as the Wall Street Journal and the New York Times and the broadcast networks.

Two days after French President Jacques Chirac announced that the subsidy reform proposal was unacceptable, the New York Times blasted the EU’s failure to come to grips with the issue.

Calling Europe’s consumers and poor farmers in developing countries “victims” of the policies, The Times editorialist claimed that farm subsidies help continue Europe’s chronic overproduction of crops which, in turn, drive down global commodity prices.

“For the millions of impoverished farmers worldwide who cannot compete with the rich nations’ subsidized harvest, Europe’s reluctance to embrace even modest reforms must be disheartening,” the editorial said.

The writer couldn’t resist taking another swipe at U.S. farm programs. “Sadly, the United States is a willing co-conspirator in this tale, betraying its supposed belief in free markets and trade with its own lavish handouts to politically powerful farm lobbies.”

It’s easy to make such comments when you’re writing in an air-conditioned office building and your next meal is as close as the delicatessen down the street. For the millions of French farmers who rely on subsidies to keep their farms in business, the issue is more complicated.

In taking his stand at the EU summit meeting in Porto Carras, Greece, Chirac, a former agriculture minister, said France was willing to continue to discuss reforming the Common Agriculture Program policies, but that the current European Commission proposal was unacceptable.

He confirmed that he had asked EU representatives to end nearly two weeks of negotiations on the CAP reforms in Luxembourg to give them time to review their positions and “find a solution that be acceptable to all.”

The fact that a former agriculture minister could rise to become president of France gives you some idea of farmers’ political clout in France and the difficulty of addressing farm subsidies in that country.

U.S. farmers have a strong interest in seeing Europe reduce its agricultural subsidies and overproduction, particularly of wheat and oilseed crops, which have resulted in long periods of depressed prices.

But, as producers have long known in this country, reforming farm policy isn’t always as easy as it seems in the editorial writers’ eyes.